Management has deemed the upcoming vote on Proposal 4 as “routine”. As this link explains, “routine” proposals can be voted upon by the brokers of clients who do not vote themselves. This vote is called a “broker non-vote”.
-A proposal to potentially dilute your equity and voting stake by 50% is not routine!
-A proposal for a company that has been repurchasing shares/units for 100+ year to suddenly change course is not routine!
-A proposal that puts a billions of dollars of M&A capital into the hands of an inexperience management team is not routine!
-A proposal to undermine your investment by a board that largely HAS NOT BEEN ELECTED BY SHAREHOLDERS is not routine!
-A proposal that upends the investment thesis (concentration) of generations of TPL investors is not routine!
ISS and other proxy advisors all too often take the side of management without fully immersing themselves in the details. It is my guess that ISS will do so in this case. As such, non-votes (abstains) will be counted as YES votes.
Should non-votes decide an item of this importance? Certainly not! Should this proposal and vote be classified as routine? Certainly not!
A board of professionals who characterize their oversight as thoughtful and diligent must be compelled to care about the long term consequences of their actions. At a minimum, future elections would be very challenging. Additionally, inclusions on other boards could be an issue as there could be a taint on a board member who is outed as having low regard towards their duty of care for shareholders. It is possible that the board doesn’t fully understand the position of most long-term TPL investors; education could be necessary.
Proposal 4 has been constructed and communicated as a slimy slight of hand. First, a massive share authorization was introduced via a stock split trojan horse. Secondly, the proposal was characterized as routine to disempower engaged shareholders. Are board members aware of this? Do they want to be a part of this?
With that, it is incumbent upon investors to make it clear to the board that our will (NO DILUTION!) must be represented. I’m urging you to take ALL of the actions below with special emphasis on #2 and #3. WRITE! :
1 – Make plans to attend the annual meeting in person on November 16th.
2 – Write to the board via Investor Relations. IR@texaspacific.com Specifically address your letter to the board.
3 – Write to the board via physical mail. Specifically address your envelope and letter to the board. Texas Pacific Land Corporation 1700 Pacific Avenue Suite 2900 Dallas, TX 75201
4 – Write to the proxy advisors that will be guiding passive, institutional, and broker non-votes.
5 – Write to your favorite financial publications and columnists. Dallas Morning News, The Houston Chronicle, The Fort Worth Star Telegram, The Wall Street Journal, Matt Levine from Bloomberg, CNBC (especially if you know a producer), and Investors Business Daily could be a great start. The more he and others hear about this “railroading” in the making, the better.
6 – Write open letters to the board. I will host to them and link to them from the blog if you would like.
7 – Reach out to other investors. Band together. Take a stand together. I would urge buy side investment managers to co-author letters in opposition.
8 – Reach out to your brokers (Fidelity, Schwab, Merrill, and the like) and let them know about the complexity of this issue. You UHNW/family office/RIA folks out there hold tremendous sway with brokers and prime brokers. And they make lots of money off of you. Let them know how strongly you feel about this issue.
9 – Reach out to the NYSE to let them know that a stock that they list is engaged in poor governance.
10 – Tweet this. Spread the word. This is a model for HOW NOT TO DO GOVERNANCE.
11 – Reach out to Morningstar Sustainalytics to make them aware that this action is not ESG friendly.
Let them know!
Let them know this this proposal is NOT ROUTINE!
Let the board know you don’t appreciate management playing with a stacked deck on YOUR DIME!
This vote, as slated, is NOT FAIR and does not represent healthy governance.
Management and some part of the board is trying to cut YOUR vote in half so they are more likely to stay in power when declassification comes into effect. Your voice will be severely diminished at the time when it matters the most. Do not stand for it!
Let them know! Take action!